The Brazilian economy has returned to pre-pandemic levels, after advancing 4.6% in 2021. The performance since the beginning of the health crisis shows, however, a country that practically did not move and continues to grow below the world average.
The expectation for 2022 is for a result for GDP (Gross Domestic Product) that is still weak, with most projections ranging between -0.5% and +0.5%, although the most positive data at the end of last year took to an upward revision in the numbers.
This scenario could worsen depending on the duration and economic impacts of the war in Ukraine. A quick fix to the conflict, however, is still the scenario for most analysts.
Rafaela Vitoria, chief economist at Banco Inter, says that its growth projection of 0.2% for 2022 can be revised to something closer to 0.5%, considering that the 2021 result came better than expected and leaves a positive statistical inheritance of 0.3% for this year.
She says that investment could again be the positive surprise for GDP this year, after growth of 17.2% in 2021, even in a scenario of monetary tightening, elections and other uncertainties. Consumption, however, should retract.
“We are going to have low growth this year. Inflation and high interest rates will still harm consumption. On the families’ side, the thermal sensation will be of a weak GDP, even if we have a positive number”, said the economist.
Vitoria says that the recovery of services also leaves a slightly better outlook for this year, noting that in the second half of 2020 GDP grew again, but employment did not react. And that in much of 2021 the opposite occurred, contraction of the economy in the second and third quarters, but with a recovery in employment.
“These sectors have the capacity to grow this year, so we can still see job creation, but inflation has been reducing the purchasing power of families. Therefore, we will not see a very positive stimulus for consumption. any positive surprise will come again from investment and the external sector. Consumption tends to fall.”
The economist at Itaú Luka Barbosa says that the data for the fourth quarter came above the bank’s 0.1% growth projection, with a positive surprise spread across all sectors, especially agriculture.
The bank should review its forecast of a 0.5% drop in GDP this year, as it had an expectation of a statistical carry-over of -0.1% for 2022, which ended up at +0.3%.
He says that the Brazilian economy responds mainly to three fundamentals: commodity prices, fiscal measures and interest rates. “Monetary policy is clearly contractionary, and this harms activity this year, but the other two fundamentals bring some expansionary effect to Brazil’s GDP.”
Ibre (Instituto Brasileiro de Economia da FGV), which forecast growth of exactly 4.6% in the year and 0.5% in the quarter, expects an expansion of 0.6% in 2022.
Armando Castelar, an associate researcher at the institute, highlights the growth of over 17% in investment last year, also anticipated by Ibre, with an expansion of almost 30% in the machinery and equipment segment.
He recalls that the numbers have not yet returned to the record level of 2013 and sees challenges for a new expansion in 2022 in the face of higher interest rates. He considers, however, that the states have the cash to increase investments in the election year, given the good collection of last year. Taxes on products grew 6.4% last year, accounting for 50% of the state ICMS.
Gustavo Cruz, strategist at RB Investimentos, says that the resumption of the service segments most affected by the pandemic should continue in 2022 and that this, together with a good performance of agriculture, can pull the GDP to a positive result.
“We have a 0.5% growth scenario, but this GDP, although it brings a small statistical burden, gives some signs of the possibility of a growth closer to 1%.”
Until last week, the median of market projections for the 2022 GDP was a growth of 0.3%, in an environment of inflation still above the target and high interest rates.
report of sheet December showed that the Brazilian economy must complete at least 16 years of growth below the world average, a period that began in the Dilma Rousseff government, in 2011, and may extend until the end of the next presidential term, in 2026.
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